DoubleU Games, Increased Payment Amount with Longer Stay Time...Strong Q3 Performance Expected

Hanwha Investment & Securities Report
Q3 Operating Profit Forecast of 56 Billion KRW

[Asia Economy Reporter Minji Lee] W Games is expected to record strong performance in the third quarter as the prolonged lockdown situation in the North American region leads to longer user engagement times. On the 6th, Hanwha Investment & Securities forecasted W Games' third-quarter revenue at 172.6 billion KRW and operating profit at 56 billion KRW.

These figures represent increases of 12% and 18%, respectively, compared to the previous forecast. Sohe Kim, a researcher at Hanwha Investment & Securities, explained, "The payment amount in the third quarter is understood to be maintained at a similar level to the record-high quarterly performance in the second quarter. As the lockdown situation in North America due to COVID-19 prolongs, the trend of increased engagement time is expected to continue, leading to sustained growth in payment amounts."

Both flagship games, W Casino and DoubleDown Casino, are showing increases in new user inflow and paying users for the company. The third-quarter revenues for these two games are expected to increase by 32.6% and 48.9%, respectively, compared to the same period last year.

The overall growth trend of the social casino market, centered on the North American region, continues into the third quarter. W Games is expected to outperform market efficiency due to the increased effectiveness of proactively executed marketing. Researcher Sohe Kim stated, "Unlike competitors who have been spending about 20% of revenue on marketing, the company has been gradually increasing from around 14%, proving its efficiency."

Expectations for fourth-quarter performance are also high. Typically, the year-end season, which features many events, is expected to elevate revenue levels to a higher tier. Additionally, the delayed Nasdaq listing of a subsidiary is scheduled for the second half of the year, and a concrete schedule confirmation is anticipated to lead to a revaluation of corporate value.

Researcher Sohe Kim advised, "The trend of multiple expansions among domestic mobile game companies continues. Based on the company's expected performance this year, the PER of 10 times stands out as significantly undervalued within the industry. It is one of the few stocks where upward revisions to earnings estimates are possible, making it a valid buy target."